By Grace Smyth
Last week on Thursday the Bank of England raised interest rates in the 11th consecutive rise to 4.25%. The Bank’s decision to raise the interest rates by 0.25% came as expected and they are now at a 15 year high. They raised rates further in an attempt to clamp down on rising inflation which surprised markets days prior as it rose to 10.4%. No doubt the rise in rates will provide further strain on households who are already struggling to keep up with the cost of living crisis, as now those with mortgages due to be renewed are going to be facing even more pressure, with many doubling or tripling their mortgages outgoings this year as their low rate contracts end.
The bank of England had also noted that they are no longer expecting a technical recession, so there is some optimism for markets moving forward. Although they are yet to publish an update forecast, the meeting minutes suggest they expect an increase in GDP during the second quarter. Slowly, slowly the economy is showing signs of recovery. With the Bank battling high inflation and raising interest rates to do that, the two are causing friction and at some point something is going to have to give, although markets are still expecting one further potential interest rate rise.
On Friday UK and EU officials also sign off on a new Brexit deal, despite kickbacks from the DUP. The Windsor Framework which is deigned address problems with the post-Brexit Northern Ireland protocol. We also saw some positive retail sales figures for February which has helped the pound claw back some of its losses from earlier in the week. Perhaps the figure is an indicator that consumer activity is reviving.
The week ahead seems fairly sparse in terms of economic data releases, with the main market movers due toward the later end of the week.
GBP 17:00 Bank of England’s Governor Bailey speech
AUD 00:30 Retail Sales
USD 13:00 Housing Price Index
14:00 Consumer Confidence
AUD 00:30 Monthly Consumer Price Index
USD 14:00 Pending Home Sales
EUR 09:00 Consumer Confidence
USD 12:30 Gross Domestic Product Annualized
12:30 Initial Jobless Claims
12:30 Personal Consumption Expenditures
GBP 06:00 Gross Domestic Product
EUR 09:00 Core Harmonized Index of Consumer Prices
USD 12:30 Personal Income
14:00 Consumer Sentiment Index
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